Avanti Feeds Ltd
NSE:AVANTIFEED
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Avanti Feeds Ltd
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Good evening, ladies and gentlemen. I'm Sawmya, the moderator for today's conference call. Welcome to Avanti Feeds Limited Q2 and H1 FY '25 Earnings Conference Call. We have with us today Mr. C. Ramachandra Rao, Joint Managing Director; Mr. A. Venkata Sanjeev, Executive Director; Mr. Alluri Nikhilesh, Executive Director of Avanti Frozen Foods Private Limited; Mrs. Santhi Latha, GM of Finance and Accounts; Ms. Lakshmi Sharma, Senior Manager, Corp Affairs; and Mr. DVS Narayana, CFO of Avanti Frozen Foods Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I would now like to hand over the floor to Mr. C. Ramachandra Rao, Joint Managing Director. Thank you, and over to you, sir.
Thank you Sawmya. Good evening, ladies and gentlemen. I am pleased to extend a warm welcome to all of you for this investors conference call to review the unaudited financial results for the quarter 2 financial year '25. Along with me here are Mr. Venkata Sanjeev, Executive Director; Mrs. Santhi Latha, General Manager, Finance and Accounts; Mr. DVS Satyanarayana, CFO; and Lakshmi Sharma, Company Secretary; and Mr. Nikhilesh is joining from the Avanti Frozen Food Processing plant from Yerravaram.
To begin with Mrs. Santhi Latha, GM, Finance and Accounts, Avanti Feeds will present highlights of the financial results for the period ended 30th September 2024 of Feed division and also consolidated financials of the company for the same period. Thereafter, Mr. DVS Satyanarayana will present the financial highlights of Shrimp Processing and Export division. After presentation by both of them, we'll take a question-and-answer session. Over to you, Mrs. Santhi Latha.
Thank you, sir. Good evening. Now I'll take you through the consolidated and Feed division financial performance highlights for the quarter ended 30th September 2024. So Q2 FY '25 results, consolidated financial results. The comparative performance of Q2 FY '25 with that of Q1 FY '25 and Q2 FY '24 have been given in the presentation already circulated. Gross income in Q2 FY '25 is INR 1,397 crores as compared to INR 1,541 crores in the previous quarter, Q1 FY '25, a decrease of INR 144 crores by 9.34%. Compared to Q2 FY '24 gross income of INR 1,312 crores, there is an increase of INR 85 crores by about 6.48%. The PBT is INR 162 crores in Q2 FY '25 as compared to INR 180 crores in Q1 FY '25, a decrease of INR 18 crores by 10%. And compared to Q2 FY '24, PBT of INR 113 crores, there is an increase of INR 49 crores by about 43.36%.
The consolidated results indicate the net impact of several factors such as increase or decrease in income expenditure and exceptional items relating to both feed and frozen food divisions, which have been discussed in the following divisional performance of these units individually.
Now I'll move on to stand-alone financial results of Feed division. Q2 FY '25 results. The gross income for Q2 FY '25 is INR 1,118 crores as compared to INR 1,298 crores in the previous quarter of Q1 FY '25, a decrease of INR 180 crores, mainly due to decrease in quantity of feed sold by 23,694 MT. The gross income in Q2 FY '25 increased to INR 1,118 crores from INR 1,064 crores in the corresponding quarter, an increase by INR 54 crores, representing 5.07% due to increase in sales quantity by 7,033 MT. The PBT for Q2 FY '25 is INR 145 crores as compared to INR 153 crores in Q1 FY '25, a decrease of INR 8 crores by 5.22% mainly due to decrease in sales volume.
The feed sales decreased to 1,34,897 MT in Q2 FY '25 as compared to 1,58,591 MT in Q1 FY '25. The PBT in Q2 has increased by INR 59 crores from INR 86 crores in Q2 FY '24, represented by 68.6%. The increase in the PBT is because of the raw material and other overhead absorption. So the major raw materials are fishmeal, soya bean meal and wheat flour. The noticeable development in this quarter is marginal softening of 2 major raw materials, that is fishmeal and soya bean meal prices, resulting in marginal improvement in the profitability. The prices of these raw materials keep fluctuating since their production is based on agriculture and fish catches from the ocean.
The prices of fishmeal decreased in Q2 FY '25 to INR 105 per kg from INR 117 per kg in Q1 and from INR 126 per kg in Q2 FY '24. In case of soya bean meal, the prices were stable at INR 49 in both Q2 and Q1 of FY '25, and it was INR 54 in Q2 FY '24. However, the wheat flour price increased to INR 31 per kg in Q2 FY '25 from INR 28 per kg in Q1 FY '25 and Q2 FY '24. The present price of wheat flour is INR 36 per kg, which is a steep hike from Q2 FY '25. While on one hand, the raw material prices are instrumental in determining the margins, on the other hand, the status of aquacultural activity, conditions such as climatic changes, diseases, et cetera, determine the consumption of feed in terms of volume, which will have an impact on the overall performance.
In the normal course, the quarter July to September is when the second crop for the shrimp culture has started. However, in the current year, due to cyclone and floods in Andhra Pradesh during July and August, the consumption of feed at a lesser volume as the harvesting took place early with small-sized shrimps that is 100 count and the culture didn't progress as expected. However, favorable climatic conditions supported farmers to reharvest from September, extending the season up to October, November, December, raising the hope -- restocking.
Not harvest.
Reharvesting from September extended the season from October, November and December, raising the hopes of higher consumption of feed during Q3 FY '25 compared to corresponding period of the previous year. To sum up, in general, FY '24-'25 is expected to be a challenging year for the aquaculture industry, both in respect of shrimp production as well as global demand for shrimp exports. In spite of the challenging year, your company is expected to have better capacity utilization.
Shrimp production and feed consumption in FY '24 and company plans for FY '25. So on the basis of estimated shrimp production of about 10.5 lakh to 11 lakh MTs in 2024, the feed consumption is expected to be about same levels. The company's feed sales during the half year ended FY '25 is 2,93,487 MT against 2,93,370 MT in half year FY '24.
Shrimp processing and exports: India's seafood exports touched 17,81,602 MT, an all-time high in volume during the financial year '23-'24. Frozen shrimp remained the major export item in quantity and value, accounting for a share of 40% in quantity and 66% of the total dollar earnings. The country's shrimp exports in terms of value increased in FY '24 compared to FY '23 by 1.5% from USD 4,809 million to USD 4,881 million. The country's overall export of frozen shrimp in quantitative terms for FY '24 was 7,16,004 MT as compared to 7,11,099 MT in FY '23, an increase of 4,905 MTs representing 0.69%.
The company's shrimp exports during FY '24 was 13,443 MTs as compared to 12,497 MTs in FY '23, an increase by 946 MT. It is estimated that the exports during FY '25 would be around 16,000 MTs.
Now I hand over to Mr. DVS. Satyanarayana to present highlights of shrimp processing and export division.
Thank you, Madam. Good evening, everyone. Now I would like to take you through the financial highlights of shrimp processing and export division. Q2 FY '25 results. The gross income for Q2 FY '25 is INR 284 crores as compared to INR 243 crores in Q1 FY '25, an increase by INR 41 crores, representing 17%, mainly due to increase in sales quantity by 640 metric tons, representing 23%. The gross income in Q2 FY '25 increased to INR 284 crores from INR 253 crores during Q2 FY 2024, an increase of INR 31 crores, representing 12% year-over-year. The sales volume during Q2 FY '25 increased to 3,423 metric tons from 2,950 metric tons in Q2 FY 2024, an increase by 473 metric tons. The PBT before exceptional items for the Q2 FY '25 is INR 23 crores as compared to INR 27 crores in Q1 FY 2025, decreased by INR 4 crores. The PBT decreased mainly due to increase in raw material cost during the quarter.
The PBT in Q2 FY '25 is INR 23 crores, a decrease from INR 31 crores in the corresponding quarter of Q2 FY 2024, primarily due to the impact of CVD, an increase in ocean freight and also depreciation on profitability in the current quarter.
Comparison of performance for 6 months ended 30th September 2024 with 6 months ended 30th September 2023: The gross income for 6 months during FY '25 was INR 527 crores as compared to INR 491 crores in the corresponding 6 months period of previous year, that is FY '23-'24. An increase of INR 36 crores in the gross income during 6 months of FY '25 is mainly due to increase in sales quantity by 597 metric tons, representing 11%. The PBT in 6 months FY '25 is INR 50 crores as compared to INR 64 crores in 6 months FY 2024. A decrease in PBT by INR 14 crores is mainly due to CVD and increase in ocean freight rates and also depreciation.
So government incentives. As you know, the company has been availing the following 2 incentive schemes from Government of India, sales-based incentive under production-linked incentive scheme and grant-in-aid under Operations Green-Long Term Intervention Scheme. Production-linked incentive scheme, company is eligible for incentive of 6% for raw products and 10% for value-added products on incremental sales over a period of 6 years from the financial year '21-'22 to '26-'27, subject to a maximum incentive of INR 79.44 crores with a minimum 5% CAGR in sales. The company has received an incentive of INR 9.92 crores pertaining to financial year '22-'23. The total incentive, including FY 2023 received until the quarter ended 30th September 2024 is INR 16.77 crores. The MOPP team conducted a physical site inspection in June 2024 as part of the investment verification.
The company fulfilled the investment obligation and also commenced production before 31st March 2024 as committed to the Ministry of Food Processing Industries. The incentive claim for FY '23-'24 will be filed in the month of December 2024.
Operation Green Scheme: Approval from Government of India for grant-in-aid for the proposed investment in new shrimp processing plant at Krishnapuram is received in the month of December 2022. Maximum grant-in-aid under the scheme is INR 10 crores. The first installment of 1/3 of grant-in-aid is due from the ministry. The company has submitted all the relevant documents in this regard. As required by MOPP, the company shared the latest update on the project status and also geotag photographs in the month of June 2024.
Now I hand over to JMD, sir, for sharing future outlook of the industry.
Thank you Satyanarayana. In my previous discussion with you, I had given an outline of global economic prospects and also prospects of aquaculture industry based on the World Bank Group's Flagship report on global economic prospects. A review of the expectations and forecast made a quarter ago remains promising and achievable during the year 2025. So far, there has been no serious disturbing factors having major impact on achieving the projected performance for the year 2025 other than the normal fluctuations.
Global shrimp market versus Indian shrimp industry: Global shrimp market size was valued at USD 68.40 billion in 2022 and is poised to grow from USD 72.16 billion in 2023 to USD 110.75 billion by 2031, growing at a CAGR of 5.5% in the forecast period 2024 to '31. In recent years, the global shrimp market has been changing as per consumer preferences and demands due to increasing consumer demand for seafood, a rise in health-conscious eating habits and the popularity of shrimp in various cuisines worldwide. The versatile nature of shrimp makes it a key ingredient in various dishes and its appeal extends across diverse cultures, leading to the increasing popularity and consumption of seafood choice globally. Moreover, health-conscious consumers are attracted to low-calorie, high-protein food source of shrimp.
The global market for shrimp continues to be volatile and global industry faced mix -- expected to face a mixed outlook amid growing competition market shifts. However, the forecast continues to be promising with projected higher volumes of consumption due to reasons mentioned above. The government of India has been initiating several measures from time to time for encouraging increase in productivity in all sectors, including shrimp culture and processing and export of shrimps.
Apart from the existing incentives of production-linked incentive on incremental sales and onetime grant-in-aid under the Operations Green Scheme for setting up seafood shrimp processing plant -- processing plant in the recently announced budget for 2024-'25 under the leadership of Honorable Prime Minister, the Honorable Finance Minister has announced financial support for setting up a network of nucleus breeding centers for shrimp broodstocking and financing for shrimp farming, processing and export facilities through NABARD. We understand that the NABARD in consultation with the Government of India, Ministry of Fisheries are working on these proposals.
Apart from these incentives, as mentioned in my previous discussion, the Honorable Finance Minister has also announced incentive scheme for employment generation and skilling in her budget speech for 2024-'25. The company has initiated the following central government schemes during Q2 FY '25.
Apprenticeship program: We have initiated the hiring of apprentices under the National Apprentice Promotion Scheme and have selected 75 apprentices under the Apprenticeship Act. By March 2025, we aim to train at least 150 apprentices across all our facilities. The apprentices will be imparted training in shrimp culture, shrimp processing, hatchery and feed-related activities. The other incentive is the Prime Minister Internship Scheme. We have enrolled and recently launched PM Internship Scheme through its portal. Initially, we'll be taking about 100 interns and the process will begin on 25th of March -- 25th of November this year. Further, the company has been training workers on personal hygiene, team building, housekeeping, techniques, anger management, communication and grooming in association with [ Lannett ], a business affiliate of National Skill Development Corporation since July 2024. A total of 350 workers have been trained to date as part of Phase 1 and an additional 500 workers will be trained in Phase 2.
I would like to share an update on levy of CVD by U.S. on shrimp imports by them. The U.S. Department of Commerce announced its final determination on 22nd October 2024 in the countervailing duty investigations of frozen warm water shrimp from Ecuador, India, Indonesia and Vietnam. The proposed rate of CVD for India is 5.77% as against preliminary determination of 4.36%. However, this rate is subject to U.S. International Trade Commission's final announcement, which is expected in December this year.
Apart from that, coming to the diversification of company's plan into pet food and pet care products. As you know, the company has tied up with Bluefalo Company Limited, Thailand, a well-known pet food and pet care products manufacturing company in Thailand for setting up a joint venture company in India involving the investment by them along with the transfer of technology. This joint venture company's name is Avanti Pet Care Private Limited, which has been established as a subsidiary of Avanti Feeds. The company has purchased about 30 acres of land to set up the facility by APCPL. APCPL will initially commence trading of pet food products in India under the APCPL brand name importing from Bluefalo, Thailand. After completing the setting up of manufacturing facility in India, the products will be produced and marketed in India. The trading activity is planned to start before 31st March 2025, for which the company has already recruited team for market development for the company's products.
Apart from pet care, we have fish feed, which we have been making a lot of efforts to bring into Indian fish culture. As reported earlier, the company has undertaken market survey for fish feed for various pieces of fish and intends to initially import feed from Thai Union Feedmill Company Limited and conduct trials under Indian conditions. Once the product performance is approved, the production in India will be taken up for domestic sales. A very serious study is being made on this aspect and we have identified about 5 or 6 the fish culture ponds and the -- where fish culture is being done and associated with them for import of the sample feed trial runs will be held. And if it is proved to be effective in Indian conditions, it will be brought initially as a trading activity. And in course of time, we will set up necessary production facilities in our existing feed plant for which already there is sufficient civil works. This is only the imported feed, the machinery has to be installed to start production.
Apart from that, I think we have covered all the aspects, and we will -- I think we can take up the question-and-answer session now. Okay. Thank you, Sawmya. We can start the Q&A session.
[Operator Instructions]
Our first question comes from Mr. Kunal Ochiramani from Kinara Capital Private Limited.
Congratulations on good numbers. Just wanted to know this quarter was good in terms of exports due to strong demand in Europe. So just wanted to gauge how is the global demand currently? And how will it be as per your industry? Secondly, there was marginal softening in commodity prices. Howsoever, as your team reported in processing due to raw material prices, the profits are down. So on that front, I wanted some clarity. And overall, some clarity on when are you going to take on fish feed business?
I think first question, Nikhilesh, can you answer that first question, please?
So on the global demand for shrimp, shrimp continues to be a strong seafood category. A lot of customers, consumers always think shrimp is a good seafood meat. So consumption only will increase with higher income levels. So that's positive. And being closed in, it can give also long shelf life. So like overall, global demand for shrimp is good and is forecasted to be positive in the long term. What was the second question?
It was about raw material prices being high in processing business and hence, the profits were down.
So in September this year, it was very unfortunate that Andhra Pradesh suffered huge rainfall. So a lot of crop, shrimp also washed away. So the off-season continued instead of 2 months for almost 3, 3.5 months where we didn't get the second crop even till now. So we had to buy raw material at higher prices due to limited availability. So that was the reason for the high cost of input.
The third question, can you please repeat?
For the fish feed business.
Fish feed, as we told you, fish feed business, we have undertaken a lot of survey and also we have identified about 6 farms, fish culture farms where we would like to run the trial feeding and seeing the results, how the fish feed, which is the formula which we have now that is Thai Union has got its fish feed which we are going to import and use it here in our farms and see how the results are because there are several varieties of fish like Seabass and unless each product has got different parameters like protein levels that is required. So it is a bit difficult for us to have different types of products and the species of fish -- fish feed. So what we are doing is now we are trying to undertake the trials in respect of each one of them and try out in about 5 to 6 fish culture farms.
We have entered into some sort of understanding MoU with the owners of these farms to undertake the trial runs. And once it is proved to be effective and if it is good, then we will make them produced in Thailand and import to start with. And gradually, we will -- once the demand picks up in India, we will start our own production facility in course of time. A lot of work is being done because the price is another important challenging factor, which the prices of Indian products keep fluctuating. And once we enter into the imported feed, it will have a cost effective, is going to determine the demand for the product. So we are trying to balance these 2 things and arrive at a competitive price for the Indian farmers so that we will be able to give them in competition with the other producers in India. So while it gives us better yields, it should be competitive also, price should be competitive. That is what our endeavor is, and we are working very seriously on this. Maybe in next 3 to 6 months, we should be able to start off on this.
Relating to my second question, CVD and freight rates are high, and it's been 2 months in the quarter has ended. So what is the outlook now and going ahead?
CVD -- the final determination has come at 5.77%. So we'll have to see that announcement sometime next month, and that will have a direct impact on that. But we are also working on various other cost-effective measures and try to see that we still make margins out of this by increasing the value-added products and all. I think Nikhilesh, can you just throw some light on this?
So CVD and ADD, they are 2 separate duties, countervailing duty and antidumping duty. And right now, our antidumping duty is about a little over 1%, 1.2%. And CVD is determined to be 5.77% where the final determinations are being made right now. So maybe we expect or we anticipate that the CVD might reduce by maybe 0.4%, but not sure. But on the alternate route on the alternate, all the other countries like Ecuador, Vietnam, Indonesia, everyone attracted CVD or ADD. Unfortunately, India stands with the highest duty of 5.77% compared to the other countries. In the long run, in the past, we've had CVD duty for shrimp before. But it's a lot of working with the government, the U.S. regulatory authority and also the private sector while to submit and rework on some of these claims that the U.S. DOC is making.
And so this is a time-taking process. But if we work it right, then the duties will come down. It's not any tariff per se, which was not revised previously. So it is a complicated case. It is a small problem for India at the moment and also the other countries have CVD. So everyone has this problem. But on the long run, I think we can work with the government to reduce such duty. And second, also, this also means higher selling price in the market. So that would be helping to drive revenues up because the selling price of shrimp has been falling continuously for the last 2, 3 years. So that's about the CVD and ADD.
It's very import it all depends on the government in U.S. and also the -- it is an ongoing process. It is almost done either CVD at -- once 1 year. The second year, again, it will be reviewed. And again, the data is collected whether -- what the incentives that the government is giving and what is the tax that is being levied and all they work out and as Nikhilesh said, it may come down also in the next year. But it is an issue which we have to live with it because CVD has been levied by U.S. and almost all the countries. It is only our efforts should be to reduce the CVD percentage on -- which is levied on Indian exports.
[Operator Instructions] Our next question comes from Pradeep Rawat from Yogya Capital.
So I have just one question about Ecuador. So how is the competition faring up with respect to Ecuador, especially after the power shortage issue over there?
Nikhilesh can you take it?
So Ecuador, we've told you in previous meetings that Ecuador and India, we have separate product categories. India does more [indiscernible] and cook shrimp that Ecuador does head on then commodity product. On the power shortage, at the current moment, this has affected Ecuador's exports. They're not able to produce as much. So the selling price in China has been moving up due to nondeliveries from the Ecuadorian market from what we gather in market intelligence. And also in the U.S. there's also less exports of Ecuadorian shrimp in the past 1, 2 months. However, we need to see how this pans out in the long term. Currently, we are -- most of the buying for the primary market is done for the holiday season. So right now, there's no large impact for any other producing country like India, Vietnam or Indonesia because of the power problems.
Okay. Understood. And one last question, if I can squeeze in. Sir, can you also mention the CVD on other countries like Ecuador and Vietnam?
Maybe if you could send an e-mail, we can send it in a separate note.
Our next question comes from Nitin Awasthi from InCred Equities.
One question continuing from the previous participant's questions is that the amount of CVD that we have paid so far, I believe we are liable to pay CVD from April this year. And so how far have we paid the CVD? And if we -- whenever we have paid it, have we booked it as an expense or as a different item?
Satyanarayana, CFO will answer the question.
Yes. So far, the company has paid around INR 8.5 crores CVD till 30th September 2024. And whatever the CVD we deposited with the U.S. government, we are booking as an expenditure. We are debiting to P&L.
Understood, sir. So as of now, when the rate increase is coming, we are still continuing depositing what we are depositing earlier? Or are we depositing as per the new rate?
No, we are depositing as per the existing rate, the rate which decided during preliminary determination, which is 4.36%.
Understood, sir. Sir, second question from my side would be, are we looking to use DDGS as a component in our feed given that there has been a lot of production of that commodity in the country now due to a different reason with the ethanol program. But however, there is a lot of animal feed companies are experimenting with this product. Are we also doing the same?
No, Nitin, we're not using it in our shrimp feed. Hello?
Yes, sir.
We are not using DDGS in our shrimp feed as of now because it has some nutritional factors which are not very good for growth promotion.
Understood. However, are we experimenting with it trying to make it efficient? Or that is...
[indiscernible] but we didn't get favorable results.
Our next question comes from Kamal Sharma, an individual investor.
Sir, my question relates to 2 recent announcements coming from government. So one is, of course, what you mentioned in the presentation about the budget, wherein there were, I think, 3 separate instances where shrimp or aquaculture was referred to. And then a recent one wherein there is an MSP hike on soya bean. Plus, of course, in your presentation, you have mentioned about hike in the wheat flour rate as well. So how do you see these 2 together? So first one is what is the opportunity size as the budget announcement open up [Technical Difficulty] and is it like the government is planning to achieve those targets in 1 year, 2 years or whatever? Or do we have that clarity yet? And of course, do we have the capacity to support that opportunity utilization, combined with the impact of soya bean price MSP announcement. So how will these 2 go together?
See, the MSP announcement has been there with -- from the government from time to time. And mostly it is related to some political activity rather than the real situation of the crop that is prevailing in the country. That has been the stand, that has been the procedure that being followed by the government. Whenever they consider that the farmers are not getting remunerated for their crop, they increase the MSP. That is the MSP is the price at which the government procures the soya from the farmers. But there are other factors which are working. The market keeps on changing. For instance, recently soya price has been increased. So MSP has been increased. But we did not feel that much impact on the soya price as such. It is remaining more or less stable.
On 5% side -- of the side, it is fluctuating on a day-to-day basis. So MSP is something which is the government regulation, which says that if you buy from the farmer, you have to buy only from that. And MSP is the price which the farmer has to sell. That is the remunerative price. So that impact will not have a direct impact immediately. But over a period of time, when the government start purchasing more, then it will have an impact. Then there will be demand for that. The prices will be more than the MSP. But as of now, it is not the situation as far as the soya is concerned.
Coming to the other question, which you mentioned.
The opportunity is coming due to the budgetary announcements.
Yes. Budgetary announcement is about the -- the other things as far as aquaculture industry is concerned, they are for processing and export, we have already explained the details of the schemes that are in operation now. And other than that they are trying to encourage nuclear breeding centers for the broodstock. That is one of the major constraints that India has been facing because India does not have a proper broodstock available for the culture. We have been importing from different countries. And each time the quality of the broodstock varies and sometimes it will have less survival, sometimes it will have quick disease -- prone to diseases and all. So the government of India would like to now encourage the Indian farmers or processing units, stakeholders to start nucleus breeding centers for this broodstock. But with the support of NABARD. But so far, no instructions or no scheme has been announced by NABARD. I think we'll have to wait for some more time if they come out with the -- on this proposal.
Other than that, as you have explained, they are encouraging the employment. So they are increasing the apprenticeship programs and also internship so that as far as the aquaculture industry is concerned, we are taking number of apprentices in each of the shrimp culture activity. For example, in feed manufacture or culture itself, shrimp culture and processing, we are training them. So that is an advantage, which overall, if it -- it is possible for Indian shrimp culture to make more economic and more competitive prices globally, it will have a very good future as the consumption of shrimp is increasing globally. These are the impacts of budget, but government seems to be very serious about this. They are taking aquaculture -- marine food products export as a one of the major thrust areas for the government for earning foreign exchange as well as also employment generation. I think I have answered your query.
Yes, to a large extent, but I just wanted to know if we have any numbers also available.
No numbers as of now. Government schemes, it will take time. See there are several schemes which were announced in last budget, they have not implemented at all. So it will take some time when they really -- only with -- after a lot of pressure, they commenced these 2 programs, mainly which is substantially helping the industry that is the PLI and also Operation Green Scheme. These 2 are good. But again, there are some constraints in that also. The government is always in the situation, they announce. But when they come -- time comes for implementation, there are a lot of bottlenecks for that. So they try to take these bottlenecks. We are trying to solve one after the other. So in course of time, we should be able to get these benefits but to give number, as of now, nobody has got numbers as to what is the projected advantage of this.
Our next question comes from Suresh Pal from KRST Capital Limited.
Sir, my question is we can see that the global shrimp prices are rising from quarter 2 start. I can see that from July end till month of October, shrimp prices have risen more than 10%. So how -- I would like to know how Avanti Feeds will likely to be benefited from this shrimp price rise that is happening in last 3, 4 months?
Nikhilesh?
Right now, there is -- I think, question -- price increase, I don't think there's any such benefit for the industry because the price increase is mainly due to new duty levies. So there's no impact as such, except the revenues are poised to go higher. So that's the only, I guess, direct impact on to the company in the immediate term.
No. But duty might have risen 5%, 6%, right? But the price rise is more than 10%. Like if I consider 3, 4 months, it is more than 10%.
Are you talking about the rise in our price?
Yes, selling price I'm talking about.
I don't know if it's increased by 10%. There are some sizes which have roughly increased by 8% and there's 1 or 2 sizes but on average about 3% to 4%, 5% maybe, but that's only because the raw material price is higher. So it's not at the market accepting higher price at the retail store and the food service store. It's more the duties and higher raw material price at the moment.
Our next question comes from [ Amit Kumar Rajput ] from Capital Craft Research.
Am I audible?
Yes. Yes.
So my first question regarding the American election and the recent policy shift you are looking for as of now, our majority of business is coming from America. So any sort of policy shift you are preparing for it as of on a tariff side?
So on the U.S. I think with Donald Trump coming, at least my personal opinion is that it's more positive for India because the last time, he was there, there is nothing substantial against India which we see. So -- but again, we don't know. So as a company that diversifying our sales channels to other countries like Europe, Asia and also Canada, Middle East, trying to get more sales portfolio into these markets so that we kind of diversify the market.
Great to know. Sir, my second question regarding the margin side. So could we see the recent trend in margin going forward in future? And recently your margin has been rise on a yearly basis.
Yes. See, the margins are rising as it is obvious because of the softening of the raw material prices. So as long as the raw material prices remain at this level, we certainly make a profit, which is unfortunately, it's not in our control. So we expect the fishmeal, which last year, it gave a lot of trouble to us because it was going up because of the exports. But this time, the Chile and Peru were the major suppliers of fishmeal to the world. They have globally, they have their good crops, they are able to supply. So the demand from India has drastically reduced. So fishmeal producers in India have now look for Indian markets. rather than depending on the export market for higher yields. That is number one.
Number two, coming to the other 2 products like the soya bean meal and wheat flour. See, the soya bean meal has been -- the production has been continuously good. See each year, year after year, this year also, the crop has done very well, and we have the already harvesting has started, and we expect the prices to still -- stop soften, but we do not know how they are going to move. But it all again depends upon the soya oil. Soya oil is another factor which determines the price of soya bean meal. So these 2 are the balancing factors for the soya bean meal. So we expect that the prices remain at this level for some more time, if not going down, at least it will not go up. It is what our expectation is. So that being the case, as far as the soya bean meal is concerned, we are very comfortable as of now.
Coming to the wheat flour, it is surprising that the wheat prices are going up like -- at a great speed going up. Nobody is able to exactly tell why it is going up. See it is essential commodity as far as the human consumption of wheat flour is concerned. So the rate at which it is going, it is impossible to even predict how -- why it is going. Crop is good. We are getting -- till March, we don't have crop. The next crop comes only in March, still 4 months are left -- 4, 5 months but it's going to be in these 4 months. It is expected that after Maharashtra elections, the prices are going to little soften.
We have to wait and see how this particularly wheat flour, which no one is able to really imagine being the most highly consumed product in daily families, the wheat flour is going up like anything which is surprising. So we will wait and see. We are expecting that after Maharashtra elections by end of this year, the prices should -- the wheat flour also should come down. So if these prices remain, definitely, we'll be able to achieve the margins what we have achieved now, and we'll be able to maintain these margins definitely.
So sir, my last question would be if you could give me any sort of guidance regarding FY '25 financial year on the margin side?
See, I'll just -- what happened was in earlier this quarter, there was as Nikhilesh said, there was unexpected rainfall, it was cyclone and all has reduced the crop -- actually, the duration of the crop, the main crop reduced. And there was a forced harvest 10 accounts -- sorry, 10 grams. The 100 count so that's why the feed consumption has come down, the margins have materially come down. But the best point of that is that later on, the August, September, the climate has really improved, and it was very congenial for the shrimp culture, so the farmers have stocked it again, and it's going well as of now. If nothing serious happens in the next 1.5 months, 2 months, we should be able to get the normal crop and also then the consumption will also be there.
We are expecting more or less whatever the last year's consumption plus or minus 5%, we should be able to achieve 5,40,000 or something like that was the last year's feed sales. And we are also likely to register more or less the same sales this year. And being, as I told you, because of the raw material softening, we may be able to get better margins compared to the last year. That's what our hopeful expectations are positive expectations, and we'll have to wait and see for a 1.5 months.
So it will result in automatically in the next FY '25 ending on 31st March which will be reflected. Again, if the situation continues, again, the next crop will start sometime in the January end and February beginning. Then again, there will be sales. I think it looks as of now, very promising, let us wait and see because it's a very volatile market.
[Operator Instructions] Our next question comes from Shriram R, an individual investor.
I have 2 questions. One is on the shrimp processing. Do you import the raw shrimp or do you have a shrimp farm? Second question is -- yes, sorry sir, go ahead.
You may continue with your second question.
Yes. My second question is the budget had some provisions regarding decrease of custom duties for shrimp feed. So how has that impacted you? Are we seeing more imports now because of the duty cut?
Yes. First, I think Nikhilesh, can you answer the first question?
We don't import any shrimp. India is one of the largest producer of shrimp. So we buy shrimp locally. So as Avanti, we don't farm ourselves. We have like some contract farming, but that's a major source of shrimp.
So as far as the reduction in the customs duty of some of the products relating to the shrimp culture. It's true that there is a reduction, but it did not really have any impact on our and rather it has a negative impact -- as far as the proteins premixes and mineral premixes we were importing earlier, but now everything is available in India. Almost every product is available in India. And what they have done is they have decreased duty on shrimp feed, imported shrimp feed, which is a negative point for -- as far as our industry is concerned, the Indian shrimp feed industry is concerned because if we reduce the price of the imported then foreign companies, they are likely to dump their products in India. So that, in fact, we have represented to the government that please bring back the same level because if you can -- if you reduce the shrimp feed duty, then the neighboring countries, they'll have the advantage of the reduced import duty, so they will dump in India. But we are -- so far, there has not been so much impact on account of this.
But certain advantages of this, the farmers do know that Indian shrimp feed is both fresh and they are able to get better yields and all those things. So they may not immediately go unless it is really very attractive for them to go and reduce the expected results feed. So that is one disadvantage which we found. But as far as the other products are concerned, we are having all the products available in India. Only one olive oil was not -- olive oil was reduced. But that is, again, a substitute for fish oil, but that is a very expensive, and India has got plenty of fish oil available. So along with fishmeal, we are buying locally the fish oil also sourcing it. So there is no need for practically any import of raw materials from that. So there is no impact of reduced duty on our feed cost.
Yes. Sir, just one question. What is the pricing difference between the imported shrimp feed and our feed?
It is same, there is no difference at all. So if you, in fact, look at the yields and performance of the Indian feed, it is much more. I think Mr. Venkata Sanjeev will be able to give more details on this.
So as of now, the prices are almost similar to Indian feed prices. The performance of the imported feed is not as good as Indian feed like Mr. Rao said, and also the new Indian feed companies, which have taken over the market share, so it's become very hard for the foreign players to enter and get a substantial market share.
See the already -- most of the foreign companies are already in India. They have their plants, for example, CP, they are already there. So many foreign companies which are there in India, and there is no need for them to bring import the feed. That's what we have represented to the government. See, they already -- the foreign companies are there in this feed manufacture in India, and they are getting the feed, then why should government of India allow reduction in custom duty on the import of these products. So I hope -- we hope that by next budget, we'll be able to get some favorable outcome of our representation. .
Due to time constraints, that will be the last question. Now I hand over the floor to the management for closing comments.
Yes.
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